Escaping the exchange of information: Tax evasion via citizenship-by-investment

Publikation: Beitrag in FachzeitschriftArtikelForschungPeer-Review

Autoren

  • Dominika Langenmayr
  • Lennard Zyska

Organisationseinheiten

Externe Organisationen

  • Wirtschaftsuniversität Wien
Forschungs-netzwerk anzeigen

Details

OriginalspracheEnglisch
Aufsatznummer104865
FachzeitschriftJournal of public economics
Jahrgang221
Frühes Online-Datum30 März 2023
PublikationsstatusVeröffentlicht - Mai 2023

Abstract

With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.

ASJC Scopus Sachgebiete

Zitieren

Escaping the exchange of information: Tax evasion via citizenship-by-investment. / Langenmayr, Dominika; Zyska, Lennard.
in: Journal of public economics, Jahrgang 221, 104865, 05.2023.

Publikation: Beitrag in FachzeitschriftArtikelForschungPeer-Review

Langenmayr D, Zyska L. Escaping the exchange of information: Tax evasion via citizenship-by-investment. Journal of public economics. 2023 Mai;221:104865. Epub 2023 Mär 30. doi: 10.1016/j.jpubeco.2023.104865
Download
@article{3336a0682f1d402d9d7397111e6db777,
title = "Escaping the exchange of information: Tax evasion via citizenship-by-investment",
abstract = "With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.",
keywords = "Citizenship-by-investment programs, Tax evasion, Tax havens",
author = "Dominika Langenmayr and Lennard Zyska",
note = "Funding Information: We thank four anonymous reviewers, the editor (Owen Zidar), as well as Leo Ahrens, Kat Bilicka, Vojt{\v e}ch Barto{\v s}, Matthew Collin, Alexander Danzer, Aixa Garc{\'i}a-Ramos, Lukas Hakelberg, Steffen Juranek, Jakob Miethe, Florian Morath, Ray Rees (†), Thomas Rixen, Dirk Schindler, Barbara Stage, Kristin Surak, Simon Wiederhold, Edward N. Wolff, Floris Zoutman, and seminar participants in Copenhagen, Dresden, Exeter, Freiburg, Hamburg, Ingolstadt, Jena, Munich, Passau, Vienna, and at the IIPF, NTA and EEA conferences for valuable comments and suggestions. Zyska worked on this project while visiting NHH Bergen and NYU; he gratefully acknowledges their hospitality as well as funding by the Bavarian Graduate Program in Economics.",
year = "2023",
month = may,
doi = "10.1016/j.jpubeco.2023.104865",
language = "English",
volume = "221",
journal = "Journal of public economics",
issn = "0047-2727",
publisher = "Elsevier",

}

Download

TY - JOUR

T1 - Escaping the exchange of information

T2 - Tax evasion via citizenship-by-investment

AU - Langenmayr, Dominika

AU - Zyska, Lennard

N1 - Funding Information: We thank four anonymous reviewers, the editor (Owen Zidar), as well as Leo Ahrens, Kat Bilicka, Vojtěch Bartoš, Matthew Collin, Alexander Danzer, Aixa García-Ramos, Lukas Hakelberg, Steffen Juranek, Jakob Miethe, Florian Morath, Ray Rees (†), Thomas Rixen, Dirk Schindler, Barbara Stage, Kristin Surak, Simon Wiederhold, Edward N. Wolff, Floris Zoutman, and seminar participants in Copenhagen, Dresden, Exeter, Freiburg, Hamburg, Ingolstadt, Jena, Munich, Passau, Vienna, and at the IIPF, NTA and EEA conferences for valuable comments and suggestions. Zyska worked on this project while visiting NHH Bergen and NYU; he gratefully acknowledges their hospitality as well as funding by the Bavarian Graduate Program in Economics.

PY - 2023/5

Y1 - 2023/5

N2 - With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.

AB - With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.

KW - Citizenship-by-investment programs

KW - Tax evasion

KW - Tax havens

UR - http://www.scopus.com/inward/record.url?scp=85151273360&partnerID=8YFLogxK

U2 - 10.1016/j.jpubeco.2023.104865

DO - 10.1016/j.jpubeco.2023.104865

M3 - Article

AN - SCOPUS:85151273360

VL - 221

JO - Journal of public economics

JF - Journal of public economics

SN - 0047-2727

M1 - 104865

ER -